SIA: UBS maintains Buy with TP $16.00. House keeps faith in its low-cost initiative. Welcome attemptsto start a medium/long-haul lowcost carrier, given its loss of Kangaroo mkt share to the Mid-East airlines, its American load factors underperforming peers and failure to capture the Indian and Chinese outbound mkt, and loss of hub dominance to LCCs…..
House thinks there is a market for long-haul LCC in Asia and LCC will dilute SIA’s overall yield but it has a good chance of achieving higher profit, with 30% cost saving and a 6ppt increase in load factor to 84% can cover up to a 20% decline in yield.
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